Objectives and Key Results (OKRs) is a collaborative goal-setting tool that is designed to help your leaders and team state what it is exactly that they want to accomplish.
Smith believes that SaaS has transitioned from helpful software into high-cost “bloatware,” and we get it—there’s been a 270% increase in SaaS spending over the last three years, with an average of $2,800 annual SaaS spend per employee, which is up 75% year over year.
It is, to put it mildly, a SaaS buying frenzy, and it’s got many growth leaders ending up with finance leaders knocking on their doors.
The reality is that the surplus of subscription spend is weighing down budgets, meaning that companies will soon be forced to measure tool outputs similar to an OKR system.
This may mean that SaaS tools really need to show value in six months or less in order to secure two-year renewals.
Companies are unlikely to actually start trimming SaaS spending in 2022-2023, but they may start to consolidate vendors. This means that the fat is going to be trimmed, and they’ll invest more in the tools that can do exactly what they need.
And we do know that SaaS tools will likely be utilized for increasingly redundant tasks instead of employing human workers to tackle them. We’re not saying that robots are taking over the world (and neither is Smith), but this is just a reality where software can manage redundant tasks so that employees can focus their productivity elsewhere.
So as you’re evaluating your tech stack, what should you be looking for? Here’s what Smith recommends:
- Make a list of all the SaaS tools that your team is using, and assign them to primary and secondary key performance indicators (KPIs) using SMART goals
- Track KPIs month over month to see which tools are aligned to improved metrics
- If a single KPI has more than four tools assigned to it, check for redundancy or go more granular in your tools’ KPIs
Are some of your tools redundant? If some are being used to achieve the same tasks, then the answer is maybe, especially if some are more effective than others at hitting specific KPIs. Trimming the fat and investing more where necessary will help you maximize your SaaS spending to get the most out of it.
And as Harry S. Truman said, “Imperfect action beats perfect inaction every time,” so start measuring your existing tools’ impact today and build the practice into the procurement process moving forward.
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